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Demonetisation: Small gains, big promise; RBI intercepts only 7.62 lakh pieces of counterfeit notes

Fake note detection jumps to 20.4%; number of suspicious transaction reports by banks, FIs and intermediaries rises by 345%

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The Reserve Bank of India (RBI) was able to intercept only 7.62 lakh pieces of counterfeit currency notes after the massive demonetization exercise that resulted in invalidating Rs 15.44 lakh crore held in Rs 500- and Rs 1,000-denominated notes.

The number of fake notes detected saw a 20.4% jump from the previous year. While the detection of counterfeit currency in the demonetized Rs 500 and Rs 1,000 notes saw an increase of 42%, the value was just Rs 41 crore.

"The number of suspicious transaction reports by Banks/FIs/Intermediaries also increased by 345%, which could possibly lead to increase in future tax revenues. This coupled with implementation of GST will help in better fiscal realisation at a future date," said SBI Ecoflash, the economic research report from State Bank of India.

Counterfeit notes have seen an increase across denominations barring the Rs 100 note. The highest increase in the fake notes was detected in Rs 500 notes with 3.17 lakh pieces turning to be fake while 2.5 lakh pieces of Rs 1,000-denominated notes were detected as fake. Banking channels also detected counterfeit notes of the newly-denominated Rs 2,000 and the Rs 500 notes. There were 638 fake notes in Rs 2,000 denomination. In addition, 199 notes of the new Rs 500 note were intercepted as counterfeits through the banking channels.

In all, there were 17,165 million pieces of Rs 500 notes in circulation with a total value of Rs 8.582 lakh crore and there were 6,858 million pieces of Rs 1,000 notes amounting to Rs 6.858 lakh crore, together amounting to Rs 15.44 lakh crore. RBI said in its annual report that out of the 24.02 billion notes of these denominations in circulation, 23.9 billion pieces have come back. This means 99.5% of the notes that were demonetized have come back to the system.

Keeping in view the urgent need for making available adequate cash to all parts of the country at the shortest possible time, concerted efforts were made by the RBI and the printing presses to augment the production and supply of bank notes, with currency being airlifted to many parts of the country.

“Reflecting these measures, total notes in circulation increased rapidly to Rs 15.06 lakh crore as on June 30, 2017, which was about 85% of the notes in circulation as on November 4, 2016. Remonetization continues to progress at a steady pace with an enhanced focus on printing and distribution to meet the currency demand,“ RBI said in its annual report.

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